The European Central Bank’s (ECB) meeting, which will be held mid-session on Thursday, April 17, will focus on monetary policy and interest rate developments. The bank is expected to cut interest rates for the sixth consecutive meeting, by 25 basis points, to 2.40%. The latest inflation reading for the eurozone, released in early April, according to Eurostat estimates, showed a preliminary increase of 2.2% in March, down from 2.3% in February. The core index, excluding food and energy prices, grew by 2.4%, down from 2.6%. This slowdown in inflation may support the European Central Bank’s ability to maintain its policy stance and temporarily pause interest rate cuts, especially after it announced this at its last meeting. However, recent changes, such as the tariffs imposed by Trump on most countries, with the eurozone accounting for 20%, have heightened market concerns about eurozone growth and the return of rising inflation, especially in the near term. This has prompted the European Central Bank to revise its near-term interest rate forecasts. Markets now expect three rate cuts before the end of the year, bringing the target range to 1.50-1.75%, compared to 2% in the pre-Trump tariff forecast.

The euro’s rise against the US dollar to its highest level in three years, coupled with the decline in the US dollar, is another factor putting pressure on the European Central Bank, as expectations of deflationary pressures on the eurozone have increased, opening the door to a more accommodative monetary policy.

Despite the absence of the economic outlook report at this week’s meeting, questions from journalists at the press conference with ECB President Christine Lagarde are expected to focus on the impact of tariffs on inflation and growth in the eurozone, and whether the bank will lower its growth and inflation forecasts in its June report, following its March downgrade to 0.9% growth this year and 1.2% next year.